Is the media exacerbating America's economic woes?

Great Debates
1

It seems that much of the news concerns America’s economic woes these days…gas prices, the stock market, mortgage crisis, weak dollar, etc.

While these things are certainly newsworthy and real problems, I’m starting to get a feeling that the media’s laying it on too thick and possibly driving down consumer confidence, dragging markets with it. (not that the markets are all that media -driven, but they’re certainly consumer-driven)

I’m not sure this is something you can really measure with any accuracy, but do y’all think maybe if they’d just STFU about it just a little, maybe folks would come out of their shells a bit and perk things up? Are they really just calling it as they see it? Or could they actually be helping us get off our fat asses and reprioritizing?

2

You know what business is going down the tubes? The newspaper business. Newspapers all over the country are firing people, cutting staff, cutting circulation, replacing reporters with the AP feed.

Now, if you worked at a newspaper, wouldn’t the woeful economic climate you see every day in your industry color your perception of the larger economy?

3

By the same measure, the media played up the bubble, running lots of stories about internet millionaires. That’s what the media does. If there is a bumper crop of corn, they run stories about how the prices have dropped for farmers. If corn is expensive, and the farmers are making tons of money, they run stories about how prices are high in the supermarkets.

I don’t think the media actually has much to do with this one, which is driven a lot by gas prices and the inability of people to get home equity loans. Foreclosures are now a significant part of sales. The stock market is driven by oil prices and bank earnings also.

Do you want the media to go into happy news mode?

4

The media exacerbates everything. I thought that was their job.

5

Right; I wasn’t trying to supress or anything, and I have no answer or alternative, but since the economy is influenced by consumer confidence and news reports seem fairly relentlessly pessimistic these days, I was wondering if there might be a significant effect, that’s all. Maybe reinforce would be a more appropriate term than exacerbate.

And of course right after I posted this thread, one of the network newscasts ran a piece of the “and now for some good news…” sort. :smack:

6

[QUOTE=Bryan Ekers]
The media exacerbates everything. I thought that was their job.
[/QUOTE]

Yeah, that sounds about right. Everything is pounced upon and exacerbated until something else pops up to invite attention.

A lot of what happens in the market is irrational, but I don’t think there are a lot of people buying and selling stocks based on what the media says about the market. My experience is that everything in the market is relative to expectations. I don’t know what information people get when they make trades, but if you own stock in an airline and gas prices go up- you don’t need the media to tell you it’s bad. If you own stock in a fast food chain and they’ve reported that profits are down because food costs are up and people are pinching their pennies tighter and the minimum wage is going to go up again… do you really need the media to make you worry?

7

I thought it was generally agreed that the problem with the U.S. economy is not too little consumer spending but too little consumer saving.

8

[QUOTE=BrainGlutton]
I thought it was generally agreed that the problem with the U.S. economy is not too little consumer spending but too little consumer saving.
[/QUOTE]

Too much consumer spending can’t be a bad thing for most businesses. Too little saving is certainly a problem for consumers though.

9

By historical measures, the economy has been well above average for the past 8 years. It’s been an extremely long economic expansion, and the U.S. has outperformed just about every country in the world during that time. And yet, there’s been nothing but economic pessimism.

Don’t worry - when Barack is elected, the media will suddenly discover that the economy isn’t so bad, and in a year or two there will be all kinds of stories about the remarkable turnaround - even if nothing much changes.

10

[QUOTE=An Arky]
I… do y’all think maybe if they’d just STFU about it just a little, maybe folks would come out of their shells a bit and perk things up? Are they really just calling it as they see it? Or could they actually be helping us get off our fat asses and reprioritizing?
[/QUOTE]

I don’t want the media shutting up about higher fuel costs, higher food costs, and the sliding stock market. These things effect me a lot. I just wish someone would do a story on availability of funds for R&D and investment in my industry.

It helps me evaluate my priorities. No matter what they report, I am not going to be a good little consumer and spend, spend, spend. I have enough stuff. I will be a bit better about energy consumption and more careful about vegetable consumption.

Right now, I am considering buying a truck (we neeeeed one) and transferring cash into equities or mutual funds or bonds, but I certainly can’t afford to do either if I am about to lose my job.

So, before I look into some investment, I have to guess if I’ll have enough money saved for heat this winter, enough cash to run the house for a while if I lose my job.

Actually, other than remembering to shut off lights, and a renewed interest in investing, my behavior isn’t changing much.

11

[QUOTE=Sam Stone]
Don’t worry - when Barack is elected, the media will suddenly discover that the economy isn’t so bad, and in a year or two there will be all kinds of stories about the remarkable turnaround - even if nothing much changes.
[/QUOTE]

It’s also true that the people who are predicting a turnaround in a year or two aren’t being listened to right now because it’s just a prediction, and because what happens then doesn’t really interest people as much as what’s happening right now.

12

[QUOTE=Sam Stone]
By historical measures, the economy has been well above average for the past 8 years. It’s been an extremely long economic expansion, and the U.S. has outperformed just about every country in the world during that time. And yet, there’s been nothing but economic pessimism.

Don’t worry - when Barack is elected, the media will suddenly discover that the economy isn’t so bad, and in a year or two there will be all kinds of stories about the remarkable turnaround - even if nothing much changes.
[/QUOTE]

I wish. I’m afraid James Howard Kunstler, who has no academic credentials as an economist whatsoever but a pretty good common-sense of history, might have a better insight here than the professional economic pundits. From his Clusterfuck Nation column, 6/30/08:

And there ain’t much the next POTUS can do about it. Even if we weren’t also faced with an imminent and irreversible peak-oil crisis that no amount of offshore drilling, tar-sands extraction, or resource wars can sufficiently mitigate.

13

[QUOTE=BrainGlutton]
I thought it was generally agreed that the problem with the U.S. economy is not too little consumer spending but too little consumer saving.
[/QUOTE]

As your quote implies, the consumer spending we have had has been financed by negative savings, not by wage growth matching the increase in productivity that has happened.

The usual suspects, the ones who are always wondering what is wrong with paying people the absolute minimum you can get away with, are now wondering why everyone is so pessimistic now that the bills are coming due.

If everyone in this country spent like me (no debt) we’d have crashed five years ago.

I remember that lots of people, in WalMart debates, wondered how companies expected people to buy their products when they didn’t give them decent salaries. The answer was to borrow, and we can see what happened.

14

[QUOTE=Sam Stone]
By historical measures, the economy has been well above average for the past 8 years. It’s been an extremely long economic expansion, and the U.S. has outperformed just about every country in the world during that time. And yet, there’s been nothing but economic pessimism.

[/QUOTE]

And the CEO, in his mansion, just having gotten a huge bonus and raise for the market cap of his company declining, wonders why all those people who haven’t gotten ahead of inflation over the past 7 years are complaining.

15

[QUOTE=Voyager]
And the CEO, in his mansion, just having gotten a huge bonus and raise for the market cap of his company declining, wonders why all those people who haven’t gotten ahead of inflation over the past 7 years are complaining.
[/QUOTE]

They may not have gotten ahead in terms of salary, if you add in benefits they sure did. And if you count the fact that almost all of them had jobs, there was low inflation and low interest rates.

This is not a bad economy. There hasn’t even been a negative quarter for growth. A bad economy is when an economy begins to actually shrink, jobs are shed like crazy, there are lines for employment, and double-digit inflation eats away at salaries. A bad economy is where young people can’t find work.

This economy may yet get bad. No one really knows where the bottom is in the current credit crunch, and there are troubling signs of worldwide inflation, in part because Bernanke has been far too growth-oriented and has taken his eye off the ball with respect to inflation. So we don’t know if the economy is headed for a soft landing or a hard one. We’ll know pretty soon.

But the economy has been mostly solid throughout Bush’s 8 years. Not because of anything he did necessarily - other than the initial tax cuts, Bush hasn’t been a great boon to the economy. Steel Tariffs, Ethanol subsidies, huge spending which has weakened the dollar - Bush has lots to answer for. But despite his incompetence, the economy actually chugged along pretty good. Even the recession of 200-2001 wasn’t all that bad, and that was preceded by the longest expansion in peacetime history.

I may look silly for saying this if the economy goes in the dumper, but I sometimes think the economy has actually become more resilient and better at managing the business cycle. Modern information technology is diversifying the economy, information about resources and trends moves quicker, and the internet has acted as a social organizing tool that has allowed private citizens to market to each other, which is making capital move more (previously purchased goods aren’t just dead weight any more - they re-enter the market and create new value).

Anyway, people have also benefited greatly by the availability of new technology and better, newer products and services. So while salaries may not have increased, what they can purchase has improved greatly in value. Ten years ago, a 60" Plasma TV would set you back $30,000. Today you can get one for a couple of grand. Would you rather have a 1998 Honda Accord, or a 2008 Honda Accord? My celllphone today is a smartphone with full time access to the internet. Ten years ago it was a large brick with the ability to dial a phone number.

These things make real differences to the standard of living of the public. They got a lot of them in the last 10 years.

16

[QUOTE=BrainGlutton]

And there ain’t much the next POTUS can do about it. Even if we weren’t also faced with an imminent and irreversible peak-oil crisis that no amount of offshore drilling, tar-sands extraction, or resource wars can sufficiently mitigate.
[/QUOTE]

So I take it you’ve been buying guns and eying that cabin in the deep woods since the last time I asked how you were changing your life based on your total belief in Kunstler’s viewpoints?

(I might note there’s some mild irony going on here, since as a pundit and published author, Kunstler could be considered part of the very media the OP is wondering about…)

17

Sam Stone -

I just wanted to pop in to give you a huge Thank You for your posts re: economics. The things that you say here and elsewhere are really just basic economic facts, but so many people I have talked to are unable or unwilling to recognize that the economy is an ever-changing entity, not just the balance in their checkbook or a breathless Kunstler-style news report.

I pay quite a bit of attention to the economic conditions of the world, and see it much the same way as you. Most people who pay attention to the Newsies just throw up their hands and panic.

18

[QUOTE=Sam Stone]
A bad economy is when an economy begins to actually shrink, jobs are shed like crazy, there are lines for employment, and double-digit inflation eats away at salaries.
[/QUOTE]

This simply isn’t true. Stagflation is a bad economy, but it is not necessary for a bad economy. I’d go out on a limb and say that the overwhelming majority of economic depressions through history have not been accompanied by “double-digit inflation.”

Or was the Great Depression not a “bad economy”?

19

[QUOTE=villa]
This simply isn’t true. Stagflation is a bad economy, but it is not necessary for a bad economy. I’d go out on a limb and say that the overwhelming majority of economic depressions through history have not been accompanied by “double-digit inflation.”

Or was the Great Depression not a “bad economy”?
[/QUOTE]

Perhaps I’m misreading again, but what do you think stagflation is? Do you agree that the 1970’s was a bad economy? I’d much rather be in an economic recession than in a period of stagflation.

20

[QUOTE=An Arky]
It seems that much of the news concerns America’s economic woes these days…gas prices, the stock market, mortgage crisis, weak dollar, etc.

While these things are certainly newsworthy and real problems, I’m starting to get a feeling that the media’s laying it on too thick and possibly driving down consumer confidence, dragging markets with it. (not that the markets are all that media -driven, but they’re certainly consumer-driven)

I’m not sure this is something you can really measure with any accuracy, but do y’all think maybe if they’d just STFU about it just a little, maybe folks would come out of their shells a bit and perk things up? Are they really just calling it as they see it? Or could they actually be helping us get off our fat asses and reprioritizing?
[/QUOTE]

Young Padawan…

You have gotten very close to something called ‘contrarian investing’…and is a tool in my investing warchest.

Basically what it is:

  • If the market is holding steady or going up and the news is terrible, this means the market will rise higher in the future. The idea is that there is a ‘weight’ on the market but the market is holding/rising anyway. Once the weight is lifted, it will tend to rise more.

  • If the market is holding steady or going down and the news is rosy…then the market will most likely decline in the future. The idea here is that there is some uplift to the market but it is holding steady/going down anyway. Once that uplift goes away, it will tend to go down more.

Note this doesn’t cover all times. IME, maybe 10-20% of the times…but it is useful along with other indicators as to when to lighten up/get more in.